Can a Car with an Outstanding Mortgage Loan Be Sold?

[McArthur]

A car with an outstanding mortgage loan cannot be sold. The specific reasons and solutions are as follows: Specific reasons: When a mortgage is taken out, the mortgage documents are held as collateral by the lending institution. Even if the documents are not physically with the lender, they can still be tracked in the relevant system. Before the loan is fully repaid, the lending institution will not return these documents to the borrower. Without these documents, the car cannot be legally transferred, making it unsellable. Solutions: If you wish to sell a car that is under a mortgage, you can ask the borrower to take out a loan to pay off the remaining balance of the car and complete the process of releasing the car's mortgage. Once the balance is paid off and all related procedures are completed, you can then repay the loan used to purchase the car.

[EmilianoDella]

I know this stuff inside out! Selling a car with an outstanding loan is a bit tricky, but totally doable. The key is settling the loan first since the vehicle title is still held by the bank. When the buyer pays, we need to split the payment into two parts: the first chunk goes to paying off the loan for title release, and the second portion is your actual car sale proceeds. If you don't fully trust the buyer, using a third-party escrow platform is the safest bet. My advice? Contact the bank in advance to calculate the payoff amount – there might be an early repayment penalty. Just helped my cousin with this recently – once you get the hang of the process, it usually wraps up in 3-5 days.

[VanPaisley]

First-hand Experience: It's Sellable! My Magotan, which still had an outstanding loan, was successfully sold last month. The key is to repay and release the lien, which usually requires buyer cooperation. For example, negotiate with the buyer to use part of their down payment to help you redeem the title, or arrange bridge financing yourself. Remember to take photos of the lien release documents issued by the DMV for your records—my neighbor last year had to make three trips because the mailed materials got lost. Important reminder: The contract must clearly state 'vehicle transfer with existing lien,' otherwise you might face legal trouble.

[DiAmara]

From a professional perspective: Selling a car during the mortgage period must comply with the "Guarantee Law". There are three key steps: obtaining consent from the mortgagee → repaying the debt and canceling the registration → completing the transfer. A common practice is signing a tripartite agreement, with the buyer depositing money into a supervised account. Be cautious not to take shortcuts with 'backdoor transfers', as a client last year became an enforcement target due to this. It's advisable to check the vehicle's valuation in advance to avoid the passive situation where the selling price is lower than the loan amount. Do not accept full payment before handling the mortgage release; I've seen cases where people took the money and ran.